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PRC: Ousted Chinese leader played major role in wiretapping scandal - NY Times

Ousted Chinese leader played major role in wiretapping scandal
JONATHAN ANSFIELD AND IAN JOHNSON
BEIJING— The New York Times News Service
Published Wednesday, Apr. 25, 2012 9:51PM EDT
Last updated Wednesday, Apr. 25, 2012 10:11PM EDT

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When Hu Jintao, China’s top leader, picked up the telephone last August to talk to a senior anti-corruption official visiting Chongqing, special devices detected that he was being wiretapped – by local officials in that southwestern metropolis.

The discovery of that and other wiretapping led to an official investigation that helped topple Chongqing’s charismatic leader, Bo Xilai, in a political cataclysm that has yet to reach a conclusion.

Former Chongqing Municipality Communist Part Secretary Bo Xilai. China's Communist Party suspended former high-flying politician from its top ranks and named his wife, Gu Kailai, a suspect in the murder of British businessman Neil Heywood.

Until now, the downfall of Mr. Bo has been cast largely as a tale of a populist who pursued his own agenda too aggressively for some top leaders in Beijing and was brought down by accusations that his wife had arranged the murder of Neil Heywood, a British consultant, after a business dispute. But the hidden wiretapping, previously alluded to only in internal Communist Party accounts of the scandal, appears to have provided another compelling reason for party leaders to turn on Mr. Bo.

The story of how China’s President was monitored also shows the level of mistrust among leaders in the one-party state. To maintain control over society, leaders have embraced enhanced surveillance technology. But some have turned it on one another – repeating patterns of intrigue that go back to the beginnings of Communist rule.

“This society has bred mistrust and violence,” said Roderick MacFarquhar, a historian of Communist China’s elite-level machinations over the past half century. “Leaders know you have to watch your back because you never know who will put a knife in it.”

Nearly a dozen sources with party ties, speaking anonymously for fear of retribution, confirmed the wiretapping, as well as a widespread program of bugging across Chongqing. But the party’s public version of Mr. Bo’s fall omits it.

The official narrative and much foreign attention has focused on the more easily grasped death of Mr. Heywood in November. When Mr. Bo’s police chief, Wang Lijun, was stripped of his job and feared being implicated in Bo family affairs, he fled to the U.S. consulate in Chengdu, where he spoke largely about Mr. Heywood’s death.

The murder account is pivotal to the scandal, providing Mr. Bo’s opponents with an unassailable reason to have him removed. But party insiders say the wiretapping was seen as a direct challenge to central authorities. It revealed to them just how far Mr. Bo was prepared to go in his efforts to grasp greater power in China. That compounded suspicions that Mr. Bo could not be trusted with a top slot in the party, which is due to reshuffle its senior leadership positions this fall.

“Everyone across China is improving their systems for the purposes of maintaining stability,” said one official with a central government media outlet, referring to surveillance tactics. “But not everyone dares to monitor party central leaders.”

According to senior party members, including editors, academics and people with ties to the military, Mr. Bo’s eavesdropping operations began several years ago as part of a state-financed surveillance buildup, ostensibly for the purposes of fighting crime and maintaining local political stability.

The architect was Mr. Wang, a nationally decorated crime-fighter who had worked under Mr. Bo in the northeast province of Liaoning. Together they installed “a comprehensive package bugging system covering telecommunications to the Internet,” according to the government media official.

Together, Mr. Bo and Mr. Wang unleashed a drive to smash crime rings that controlled large portions of Chongqing’s economic life. In interviews, targets of the crackdown marvelled at the scale and determination with which local police intercepted their communications.

“On the phone, we dared not mention Bo Xilai or Wang Lijun,” said Li Jun, a fugitive property developer who now lives in hiding abroad. Instead, he and fellow businessmen took to scribbling notes, removing their cellphone batteries and stocking up on unregistered SIM cards to thwart surveillance as the crackdown mounted, he said.

Not only those suspected of being mobsters, but also political figures were targeted. One political analyst with senior-level ties, citing information obtained from a senior military colonel he recently dined with, said Mr. Bo had tried to tap the phones of virtually all high-ranking leaders who visited Chongqing in recent years, “including Zhou Yongkang,” the law-and-order czar who was said to have backed Mr. Bo as his potential successor.

“Bo wanted to be extremely clear about what leaders’ attitudes toward him were,” the analyst said.

Perhaps more worrisome to Mr. Bo and Mr. Wang, however, was the increased scrutiny from the party’s Central Commission of Discipline Inspection, which by the beginning of 2012 had stationed up to four separate teams in Chongqing, two undercover.

Beyond making a routine inspection, it is not clear why the disciplinary official who telephoned Mr. Hu – Ma Wen, the minister of supervision – was in Chongqing. Her high-security land link to Mr. Hu from the state guesthouse in Chongqing was monitored on Mr. Bo’s orders. The topic of the call is unknown but was probably not vital. Most phones are so unsafe that important information is often conveyed only in person or in writing.

But Beijing was galled that Mr. Bo would wiretap Mr. Hu, whether intentionally or not, and turned central security and disciplinary investigators loose on his police chief, who bore the brunt of the scrutiny over the next couple of months.

Internal party accounts suggest that the party views the wiretapping as one of Mr. Bo’s most serious crimes. One preliminary indictment in mid-March accused Mr. Bo of damaging party unity by collecting evidence on other leaders. Party officials, however, say it would be far too damaging to make the wiretapping public. When Mr. Bo is finally charged, wiretapping is not expected to be mentioned.

“The things that can be publicized are the economic problems and the killing,” according to the senior official at the government media outlet. “That’s enough to decide the matter in public.”

BEIJING: Bo Xilai's wife, Gu Kailai has confessed to the police that she was present in the hotel room when British businessman Neil Heywood was poisoned.

"I did it," The Telegraph quoted Gu, as admitting to the Chongqing police and confessed that she was responsible for the murder.

Wang Lijun, the former chief of police in Chongqing, who fled the town fearing for his life, gave his account of her alleged confession to diplomats at the US consulate in the nearby city of Chengdu in February. According to The Telegraph, Wang revealed that Heywood, a fixer with decades of experience in China and a family friend of Bo and his wife, was held down in a hotel room in Chongqing and forced to drink cyanide.

"Gu said 'I did it' three times to Wang," a diplomatic source with knowledge of Wang's account was reported , as saying. "It was a gruesome scene, Heywood spat the cyanide out and they had to give him more," he added.

Reports claim that Heywood , Gu and her son, Bo Guagua, are said to have had a close relationship until it ended following a quarrel over an "economic" matter, which was finally followed by Heywood's murder.

His relationship with the Bo family stretched back for over a decade. At the time of his death, Heywood was thought to be raising money for an £80 million shopping centre dedicated to British luxury goods.

BEIJING (USA TODAY) — The expunging of a rising star in China's communist leadership amid a murder scandal has gone beyond the fate of one man, and is breaking down the wall of secrecy that has until now shielded China's growing elite class from public scrutiny of its wealth.

Bo Xilai, an ambitious regional party chief set to join the nine-member group that wields supreme power in China, vanished from sight last month amid accusations of graft and abuse of power. Soon after, his wife was named a suspect in the November death of a British businessman.

China's ruling Communist Party said Bo was relieved of his duties after having "seriously violated party discipline." That was supposed to end the matter.

But while Beijing's censors have tried to control the story, China's 500 million Internet users have turned the party's crisis into its most public scandal ever. And it's exposing an uncomfortable truth for China's Communist rulers: the growing desire among China's elite to send their money and children to the West and the seat of capitalism and democracy — the United States.

"Bo Xilai is rattling everyone's cages again, there is a fear that things could change, and there's always a fear of change," said Rupert Hoogewerf of Hurun Report, which publishes "China's Rich List."

The scandal arose in February when Bo's police chief Wang Lijun fled to a U.S. consulate and begged for asylum in a desperate attempt for protection after he learned of the connection Bo's wife had to the murder of Briton Neil Heywood. Wang was turned over to China's state security, and neither he nor Bo have been seen in public since.

Bo's wife, Gu Kailai, and a family aide, are suspected of murdering Heywood over a "financial dispute," said state news agency Xinhua. Heywood, who helped their son Bo Guagua, enter top British boarding schools, was poisoned after threatening to expose Gu's illicit money transfers abroad, Reuters reported.

"Illegal money transfer by officials and entrepreneurs is a serious problem," said Hu Xingdou, an economics professor at the Beijing University of Technology. "People use different passports, and their sons and daughter living overseas, to evade the controls."

On Tuesday, a letter from the son, Bo Guagua, now a Harvard graduate student, ran in the Harvard Crimson in which he denied charges on China's blogs that his parents used illicit money to get him into the Ivy League where he is accused of driving around in a Porsche and partying with Westerners.

Strikingly, the Bo affair is prompting some to suggest the root cause of the scandal might be China's own system. Independent business magazine Caixin railed this week against "unchecked power" in China, saying the Communist Party's "authoritarian regime" may be part of the problem.

"The lesson from Bo's case is that only institutionalized oversight can prevent the abuse of power, and that only a democratic mechanism can prevent officials from becoming corrupt," Caixin reported.

China remains new to the principle of private property (all land is owned by the state but can be leased long-term), making the USA attractive to rich Chinese. The USA allows foreigners to apply for permanent residence if they invest at least $500,000 in a commercial enterprise that creates or saves 10 U.S. jobs. In 2011, three quarters of the applicants were from one country: China.

"It's insane, business has almost tripled since last year," said Micah Truman, partner at Beijing-based Asiawise, a firm that helps wealthy Chinese join the EB-5 program. "There's a huge desire for people to have their children educated in the U.S., and a desire to diversify the geographic locations of where their money is stored."

Others are parking their cash elsewhere to hide it. Up to 18,000 corrupt officials fled abroad with more than $120 billion in stolen money from the mid-1990s until 2008, reported China's central bank in June in a posting that was quickly deleted.

After more than six decades of rule by an often paranoid Communist Party, great wealth and foreign connections still raise suspicions in a country where rulers vow to keep order in return for unelected power, and where many citizens remain in grinding poverty.

"We must deeply recognize that the biggest danger facing the ruling party is corruption," Chinese Premier Wen Jiabao said in the Communist journal, Seeking Truth. Wen called for more efforts to make officials declare their personal assets, and tighter control of "naked officials," those have dispatch their spouses and children overseas, ahead of their own eventual flight.

But such information would not be made public, Hu said. "We need 'finance in the sunlight,' " he said, with an independent judiciary and a media allowed to investigate corruption.

In Chongqing, the mega-city that Bo ran as party chief, Liu Qun, founder of Changlong pharmaceuticals , said rich friends have settled abroad and bought property "so their kids can be educated there," he said.

"China is still in transition between a planned and a market economy, so corruption is very serious now. But if we have more openness and transparency, corruption will naturally disappear," he said.

Ousted Chinese Politburo member Bo Xilai has been exposed to have been linked in with wiretapping fellow Chinese politicians, including President Hu Jintao, leading to an investigation by the government and his subsequent removal from office. Up until recently, the story of Bo has been one of a Communist Party official who was ousted because he pushed too hard for populist reforms with a curious twist of his wife being suspected of murdering a British businessman. The wiretapping accusations were left out of the public account of Bo’s removal from office, but it appears that he had been eavesdropping on other officials for several years. The wiretapping reportedly began as a way to fight crime and maintain political stability in Bo’s southwestern region. Bo's brother resigned as an executive from the corporation Everbright Wednesday while his son penned a letter defending his lifestyle.

"China is still in transition between a planned and a market economy, so corruption is very serious now. But if we have more openness and transparency, corruption will naturally disappear," he said.

Yeah, it does sound better than to say it is a feudal totalitarian state operating under the guise of Marxist theory, run by the elites of the CCP, kept in power by their private army, the PLA and police, the PAP.

Yeah, it does sound better than to say it is a feudal totalitarian state operating under the guise of Marxist theory, run by the elites of the CCP, kept in power by their private army, the PLA and police, the PAP.

Kind of reminds me of some other country...... hmmmm..... gee what could that be?

The scandal surrounding fallen Chinese leader Bo Xilai spread to his wider family as his elder brother resigned as a deputy chairman of a Hong Kong-listed company, shortly after Mr. Bo's son issued a statement to counter allegations he lived an extravagant lifestyle.

The moves represented the first public acknowledgments of the crisis by members of the elite Bo family. Mr. Bo's father, Bo Yibo, was one of the revered "Eight Immortals," leaders who helped build prosperity for China after the political upheavals that followed the Communist revolution in 1949. The Bo scandal has highlighted the business interests and lavish lifestyles of offspring of such party aristocracy, often called "princelings."

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Bo Xilai and his son at a 2007 memorial ceremony for Bo Yibo in Beijing.

Bo Xilai was suspended from the powerful Politburo this month and placed under investigation for "serious discipline violations." His wife, Gu Kailai, is a murder suspect in the death of British businessman Neil Heywood.

Their son, Bo Guagua, a postgraduate student at Harvard University's Kennedy School of Government, has been implicated loosely in the scandal through a government statement that said he and his mother had been close to Mr. Heywood, but that the relationship had soured over a business dispute.

Bo Xilai's elder brother, Bo Xiyong, resigned on Wednesday as deputy chairman at China Everbright International Ltd., a state-controlled energy and environmental company, "for the best interest of the company and its shareholders," according to a company statement. It added that Bo Xiyong had no disagreement with the board.

Bo Xiyong had been on the board since 2003. He is also a deputy general manager with its state-owned parent, China Everbright Group, which he joined in 1998. It wasn't immediately clear whether he also stepped down from that position. Since joining the board, Bo Xiyong has been paid cash compensation some years as high as $346,000, a total over his tenure of $1.8 million. In 2010 and 2011, Bo Xiyong exercised stock options worth $5.2 million, according to data service S&P Capital IQ. He continues to hold options worth $3.2 million.
The Chongqing Drama

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Reuters

Though he has used the name Li Xueming at Everbright for several years, Hong Kong and Chinese state-controlledmedia have referred to him as Bo Xiyong. Many members of princeling families use different names for doing business in Hong Kong and overseas.

"The board would like to take this opportunity to clarify that recent reports by the media on Mr. Li's family background have no relationship with the normal business and operations of the company, and have not affected and will not affect the normal business and operations of the company and its subsidiaries," the Everbright statement said. A spokeswoman at China Everbright International declined to comment further.

Bo Xiyong also set up a Hong Kong-based company called Advanced Technology & Economic Development Ltd. in 1992, using his original name. He is listed as one of five directors of the company.

Several members of the sprawling Bo and Gu families have carved out lucrative business careers.

Hong Kong has been a base of operations for Ms. Gu's eldest sister, Gu Wangjiang, since at least the early 1990s. Her main investment vehicle appears to be Hongkong Hitoro Holdings Ltd., which operates from a marble-decorated office near the top of a skyscraper overlooking Hong Kong's Victoria Harbor.

Born in 1947, Gu Wangjiang is known in Hong Kong as Kuk Mong Kong, the Cantonese spelling of her name, and has for years been a Hong Kong permanent resident and passport holder, a status that gave her a critical leg up in building her business empire.

Gu Wangjiang founded Hitoro in 1991, and shortly afterward used it to purchase a $1.7 million luxury apartment in Hong Kong's Parkview complex. Hitoro netted a nearly $10 million paper profit when it sold the apartment in early 2011, according to property records.

Hitoro's activities range from fabricating steel building supplies to marine engineering, according to an archived copy of the company's website. Its Its assets include a Shandong-province based metal processing and building materials group, known as Sunscape, which counts a unit of German industrial giant ThyssenKrupp Steel as a joint venture partner. Hitoro also runs a high-quality paper joint venture in Qingdao with France-based ArjoWiggins. representatives declined or didn't respond to interview requests. A company official declined a reporter's request to enter Hitoro's offices.

The most lucrative of Hitoro's businesses appears to be TungKong Security Printing Co., which company filings say is China's biggest printer of bank receipts, bills, commercial papers and smartcards. TungKong counts China's biggest banks, companies and government institutions as customers, including the People's Bank of China, China Mobile and the China Welfare Lottery. Tungkong printed tickets for the Beijing Olympics and is licensed to produce credit and debit cards for China's popular UnionPay network.

Gu Wangjiang co-founded the secure-document production company in 1996 in a venture with the Jinan government and a Jinan-based computer maker. Gu Wangjiang's Hong Kong residency and ownership of Hitoro allowed the group to establish TungKong as a Sino-foreign joint venture, giving the company generous tax concessions. Hitoro contributed $420,000 of the initial $1 million in start up investment, according to company filings. It was listed in Shenzhen in 2007.

Another sister of Gu Kailai, Gu Wangning, is a major shareholder in another company that in turn is TungKong's third-biggest shareholder. That company's shares in TungKong are valued at around $43 million.

Corrupt Chinese officials commonly cash in on their positions through their families. It is not uncommon that their spouses go into businesses that become a conduit for illegal payments, and that children are packed off to schools overseas where they open bank accounts that fill up with illicit money.

However, many children of senior party leaders are openly in business. For instance, Premier Wen Jiabao's son, Yunsong, is a co-founder of the investment firm New Horizon Capital. He left the firm after questions were raised about a planned 2010 investment in a pharmaceutical company that might have breached Hong Kong securities regulations. Later, when the younger Mr. Wen took a position in a state-owned aerospace company, shares in its listed APT Satellite Holdings Ltd. unit soared almost 50% in a few days.

A daughter of President Hu is married to one of the country's best-known Internet entrepreneurs, the former chief executive of Sina Corp., Mao Daolin.

In his statement issued Tuesday, Bo Guagua said, "I have never lent my name to nor participated in any for-profit business or venture, in China or abroad."

He said in the statement on the website of the Harvard Crimson newspaper that he had been involved in a not-for-profit social-networking website in China, the aim of which was to "assist NGOs in raising awareness of their social missions and connecting with volunteers." He said the project was based out of the Harvard Innovation Lab, with the participation of fellow students and friends, and was still under development. Friends say the website is called guagua.com.

He said he had no comment about the parallel investigations into his father and mother.

Bo Guagua's whereabouts were unclear. As The Wall Street Journal reported last week, a person familiar with the matter said he appeared to have left his apartment in Cambridge, Mass., the week before, escorted by private security guards.

He said his tuition and living expenses at Harrow, a British private school, as well as Oxford and Harvard universities had been funded by scholarships "earned independently" and by his mother's earnings as a successful lawyer and writer.

He didn't, however, say who provided the scholarships.

Bo Guagua also said that he had never driven a Ferrari or visited the U.S. ambassador's residence in Beijing, and hadn't been to the U.S. Embassy there since 1998. The Wall Street Journal reported in November that people familiar with the episode early last year said he had arrived at the U.S. Ambassador's residence in a red Ferrari to pick up a daughter of Jon Huntsman, then the ambassador, for a dinner appointment.
—Jeffrey Ng and Alex Frangos contributed to this article.

Much about the stunning fall of politician Bo Xilai remains unknown. But the case has fueled Internet rumors and roiled the political waters in China.
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By Peter Ford, Staff writer / April 28, 2012
posted April 28, 2012 at 4:29 pm EDT
Beijing

When British businessman Neil Heywood was found dead in his hotel room in the southwestern city of Chongqing in November, the discovery attracted little attention.

Neither the fact that the police said he had died of alcohol poisoning (when he was known to drink only rarely) nor the fact that his body was hastily cremated without an autopsy (unusual in China) – nor the unexplained presence of police at the cremation, appeared to arouse undue suspicion.

Today, suspicion swirls around every aspect of his death, not least because the Chinese authorities now say that the wife of one of China's best-known and most powerful politicians, Bo Xilai, is "highly suspected" of having ordered Mr. Heywood's murder.

Both Mr. Bo and his lawyer wife, Gu Kailai, are currently in detention and under investigation, and have not been seen publicly for more than a month.

RELATED: Will Bo Xilai affair open the 'black box' of China's leadership?

Heywood's death and the Bo couple's detention are two of the few indisputable facts in a murky affair whose political ramifications are magnified by Bo's importance: Until scandal overtook him, he was a contender for one of the top nine jobs in the ruling Communist Party. It is clear to anyone familiar with the way Chinese politics works that Bo's enemies have used and amplified the scandal to bring him down.

Almost everything else about the case is speculation based on unidentified sources whose motives in recounting the case's details are unclear. The police have said nothing, and the absence of reliable information has left the field clear for a welter of dramatic rumors, spreading like wildfire on the Chinese equivalent of Twitter, ranging from the type of poison used to kill Heywood to an impending military coup.

The case began to crack open Feb. 7, when photographs appeared on Weibo (China's version of Twitter) showing an unusual congregation of police outside the US Consulate in Chengdu, 170 miles from Chongqing. Two days later, another blogger posted the passenger manifest of a flight from Chengdu to Beijing showing that Bo's right-hand man, Wang Lijun, had taken that flight in the company of a vice minister of security.

Mr. Wang, it transpired, had fled to the US consulate, apparently seeking asylum, but left of his own accord when he was sure that regional police loyal to Bo wouldn't take him into custody.

Wang was almost certainly not going to be given asylum by the United States. He had been the chief of police in Chongqing during Bo's noisy antimafia campaign, which critics and victims complained had relied heavily on torture. But before handing himself over to the Chinese security chief and disappearing into an interrogation room somewhere, Wang showed US diplomats a police file suggesting that Ms. Gu had been involved in Heywood's murder.

Why would Wang have betrayed his mentor? A few days earlier they had had a falling out; Bo had fired Wang as police chief and demoted him to an innocuous municipal job. According to people familiar with the reopened police investigation into Heywood's death, Bo did so after Wang had shown him the evidence of his wife's involvement.

Why Wang even brought up the matter with his boss, when it had until then caused no waves, is unclear. But Bo's reaction seems to have made Wang fear for his life and seek protection.

It was not long before the official Xinhua news agency announced that Bo had been removed from his post as head of the Chongqing Communist Party committee.But a month passed before he was fired from its elite 25-member Politburo, suggesting fierce debate over his fate.

In the meantime, stories had begun to appear on Weibo and in foreign media detailing allegations that Gu had made hundreds of millions of dollars selling government jobs in Chongqing, that Bo had seized the assets of businessmen felled by his antimafia campaign and used them to swell municipal coffers, and that Heywood had been a close friend and business partner of Gu's, helping her to invest her millions abroad illegally.

SEE ALSO – China's leadership shakeup: Bo Xilai and 4 other names to watch

Heywood, a 40-something Englishman with a penchant for cream linen suits, Jaguar cars, and sailing boats, first got to know Bo when Bo was running the city of Dalian, on China's east coast, more than a decade ago. Heywood apparently helped Bo's son Guagua get into Heywood's alma mater, Harrow, the exclusive (and expensive) English private school, and traded on his privileged connections in his role as a business consultant.

The Xinhua report that Gu was a suspect in Heywood's death said only that the two had had "a financial dispute" without giving details of a motive she might have had for killing him. That did not stem a flood of allegations on Weibo that the two had been lovers and that Gu (or Bo) had killed him in a crime passionnel.

Neither Gu nor Bo has yet been charged with involvement in the alleged murder. Bo has been publicly accused only of "grave disciplinary violations" – a party issue, not a legal one. But it is almost inconceivable that Xinhua would declare that Gu had been detained as a murder suspect unless she was going to be formally arrested, charged, tried, found guilty, and sentenced, probably to death. If Bo did seek to block an investigation of his wife, he would be an accessory after the fact, a crime punishable by up to 10 years in prison.

Public pressure in China for a full accounting of the facts behind Heywood's murder and Bo's fall is not all that the government here has to deal with.

The British authorities have also been demanding a proper investigation of the death since February. Only on April 10, after four British requests, did Beijing inform London of a police investigation.

CHINESE authorities are expected to release a confession of involvement in the murder of British businessman Neil Heywood by Gu Kailai, wife of a purged communist leader, in an effort to close the scandal.

The official version will aim to resolve conflicting accounts of how Heywood, 41, met his end. They include claims he spat out cyanide and resisted his killers. In some versions, Ms Gu was said to have been present when he died.

The death of Heywood, reportedly a British agent, in a hotel in Chongqing city last November has led to the fall of Bo Xilai, a rising star in the Communist Party, and to the arrest of Ms Gu and an aide on suspicion of murder.

Faced with damaging publicity amid the biggest political upheaval inside the party since 1989, Chinese leaders are under pressure to close the case and declare it an isolated incident, according to sources in Beijing.

Among the stories casting new light on China's leadership is the first account of Mr Bo's final moments of freedom, which appeared on a Hong Kong website.
Rec Coverage 28 Day pass

It says Mr Bo was at home in Beijing at 2pm on April 9 when two senior officials, He Yong, deputy of the party's central disciplinary commission, and Zhang Jinan, vice-minister of its organisation department, arrived accompanied by four military officers. They informed him he had been summoned to a meeting in the Great Hall of the People, the scene of political denunciations since the era of Mao Zedong.

"As an experienced politician, Bo knew he had come to the end of the road," the story on the Dong Xiang website says.

The 62-year-old asked to telephone his relatives but all the lines had been cut. "I've long prepared for this moment but it has still come as a surprise," he is said to have told the officials.

Before he was led away, Mr Bo reportedly turned to his household staff and said: "I go first. You all take care of yourselves. You must trust in history and trust in the party central committee."

Mr Bo was then driven away in a limousine under guard. On arrival at the Great Hall of the People, he came face-to-face with three of the most powerful figures in the party his father, Bo Yibo, helped bring to power in 1949.

One was He Guoqiang, head of the disciplinary commission, who is ranked No 8 on the party's highest body, its nine-man politburo standing committee. His presence meant the most powerful men in China had ordained this outcome. Alongside him was Li Yuanchao, head of the organisation department, which determines all appointments in the party.

The third man was Ling Jihua, whose bland official biography lists him as secretary to the central committee. The Hong Kong report says he is also the personal secretary of President Hu Jintao and is in charge of the elite 8341 troop, which guards the country's leaders.

One man read out a document dismissing Mr Bo from his seats on the 25-member politburo and the 350-member central committee. His wife would be investigated for murder.

"Very well," Mr Bo responded, "but I only believe in facts."

With that, he was led away.

Although there was no independent verification of the account, Chinese analysts said its details and language seemed to be authentic.

It was a rare piece of restrained reporting amid a riot of speculation online after an unexplained lifting of censorship from one of the most popular sites, Baidu.com. It was interpreted by some as a deliberate leak as the "liberal" faction of the party sought to influence public opinion.

Included were postings critical of retired president Jiang Zemin, 85, who is still seen as the head of a group that included Mr Bo and was opposed by Mr Hu.

Many blogs talked about Mr Jiang's friendship with Song Zuying, a famous singer. Others alleged he was a fake communist and had collaborated with the Japanese invaders of China during the 1940s.

New York Times columnist Thomas Friedman likes to muse about how wonderful it would be if the United States could be like China for a day.

The scandal engulfing former rising star Bo Xilai, the cashiered Communist Party boss of the city of Chongqing, suggests how this magical day might go down.

A popular governor who rose to prominence based on his anti-corruption campaign while illicitly enriching himself would fall from grace. His wife would be accused of murdering a foreign businessman. His security chief, whom he relied upon to run an extensive spying operation on potential foes, would seek asylum at a foreign consulate, fearing for his life.

State and federal security forces would have a standoff outside the consulate. The entire nation would become obsessed with the case, but the government would prevent anyone from searching the Internet for information about it. Everyone would assume that the government would control the political fallout by arranging a nice show trial for the disgraced governor.

Such would be the joys of China-for-a-Day in the Bo Xilai script. The affair doesn’t truly tell us anything new about China. But the lurid details — the body of the allegedly murdered British businessman cremated without an autopsy; Bo’s privileged son partying as a student at Oxford and Harvard — might jolt some China-enviers out of their feverish delusions.

It’s not just Friedman. Andy Stern, the former president of the Service Employees International Union, wrote a Wall Street Journal op-ed titled “China’s Superior Economic Model.” He cited Bo — and his “people-oriented development in Chongqing” — as one of the impressive assets of “Team China.” Ann Lee’s new book. “What the US Can Learn From China,” asks, among other things, “How does the Chinese political system avoid partisan rancor, but achieve genuine political accountability?”

President Obama has used China’s public investments as a prod for adopting similar policies at home and said longingly of one of China’s technological advances, “That used to be us.”

The Bo scandal shows the Chinese system to be as thoroughly rotten as one would expect of a kleptocratic police state. What is unusual is only that it wasn’t kept under wraps.

The country is run by a small number of Mafia-style families jostling with one another for power and profits. China’s power brokers are quasi-feudal lords with networks of cronies grasping all that they can.

The sisters of Bo’s wife, Gu Kailai, controlled a $126 million network of international businesses, according to Bloomberg News. They got rich on the families-and-friends program.

If China’s economic rise has been something to behold during the past three decades, it is not a tribute to the technocratic proficiency of China’s rulers. In China’s mixed system, it is the genuinely private companies that are more economically efficient.

The World Bank writes: “A recent study shows that between 1978 and 2007 total factor productivity growth (a measure of efficiency improvements) in the state sector was a third that of the private sector, which has proved to be the more powerful engine of growth and innovation.”

China’s economic miracle may well stall out before we get the opportunity to emulate its supposed wonders. China can’t convert agricultural workers into manufacturing workers and suppress domestic consumption in the cause of creating an export-driven juggernaut forever.

The World Bank report recommends that China move to the next stage of development by “reforming and restructuring state enterprises and banks, developing the private sector, promoting competition, and deepening reforms in the land, labor, and financial markets.” In other words, it should learn from us.

The existence of China envy is a testament to the allure of 9 percent GDP growth coupled with a few fashionable policies like support for high-speed rail and solar energy. On this basis, Friedman calls China’s rulers a “reasonably enlightened group of people.” Their spectacular repression, greed and Sopranos-like power struggles notwithstanding.
Rich Lowry is the editor of National Review.

April 30, 2012Details Contradicted in Episode of Chinese Privilege
By DAVID BARBOZA and EDWARD WONG

BEIJING — The tale has taken on mythic proportions in China, tainting one of the country’s most ambitious leaders and adding fuel to a scandal that is still unfolding in the halls of power here.

It goes like this: Bo Guagua, the younger son of the leader, Bo Xilai, arrived one evening last spring at the home of the United States ambassador to pick up one of the ambassador’s daughters for a dinner date. He was supposedly wearing a tuxedo and driving a red Ferrari, an emblem of the privileged lives led by the children of “princelings,” members of elite Communist Party families.

At the time, the elder Mr. Bo, party chief of the western metropolis of Chongqing, was preaching a return to the socialist values of the Mao era.

The account gained prominence when it appeared on the front page of The Wall Street Journal in November. It has since circulated widely in China and become a political weapon wielded against the elder Mr. Bo, who was purged from his party posts in April and put under investigation as a suspect in “serious disciplinary violations” after the flight of his former police chief to an American Consulate. Gu Kailai, his wife and the mother of Bo Guagua, is a suspect in the murder last fall of a British businessman.

In March, as Mr. Bo felt the pressure from his political rivals building, he gave a news conference at the annual National People’s Congress in Beijing, saying “a few people have been pouring filth on Chongqing and me and my family” and called the Ferrari story “sheer rubbish.”

Though his son, 24, is known to lead a lavish lifestyle, many of the details in the public account of that evening turned out to be incorrect, according to interviews with the son; Abby Huntsman Livingston, a daughter of the ambassador, Jon M. Huntsman Jr.; and three others present at the dinner.

The interviews help reveal how what began as gossip made the rounds in expatriate circles in Beijing until it became an accepted truth about the Bo family. One person who told the version of the story that eventually surfaced was Mr. Huntsman. At least two diplomats in Beijing said they heard it from him before he left Beijing in late April 2011. (The New York Times reported this April that American officials had said Bo Guagua came to the ambassador’s residence in a Ferrari. )

Ms. Livingston, one of two Huntsman daughters at the dinner, said in her role as family spokeswoman, “My dad’s version of the story has always been a reflection of what we told him.”

The way the story caught fire so quickly shows the kind of fascination that the lifestyles of China’s elite can evoke in a nation where the upper echelons of the party exist in a world apart from those they govern.

“I did not drive at all that evening, and certainly did not sit in a red sports car,” Bo Guagua said by telephone on Friday, in his first interview since his father was deposed and both parents were put under investigation. “I’m not sure where this story comes from.”

Even Mr. Bo’s appearance was wrong in the account: he did not wear a tuxedo, people at the dinner said.

The scrutiny of Mr. Bo’s lifestyle has intensified during the scandal. A graduate of the elite Harrow School and Oxford, Mr. Bo is now a student at the Kennedy School of Government at Harvard and an aspiring Internet entrepreneur. He has driven a Porsche in Cambridge, Mass., has lived in an expensive apartment and has a penchant for polo.

In two telephone conversations, he declined to discuss the scandal surrounding his family, but did discuss the one evening in Beijing, in early April 2011, that he spent with Ms. Livingston and Mary Anne Huntsman, 27, Mr. Huntsman’s eldest daughter.

In e-mail exchanges over the past week, Ms. Livingston also gave statements that refute the public account of the event. She said the woman who had organized the dinner picked up her and her sister at the ambassador’s residence and drove them to Nobu, an upscale Japanese restaurant. There, they met Mr. Bo for the first time, along with several other strangers. The organizer, a member of the expatriate community in Beijing who spoke only on the condition of anonymity, gave her account of the dinner in an interview, and it matched Ms. Livingston’s.

Mr. Huntsman had met the younger Mr. Bo and his father before in Chongqing and had been so impressed that he wanted the children to get together, said one person who had been at the dinner. Mr. Bo said he had arrived at the dinner in a black Audi sedan driven by a chauffeur, a common car among families of senior officials.

The dinner lasted more than an hour. Then Mr. Bo, Mary Anne Huntsman and a European friend of Mr. Bo’s left for a bar. Ms. Huntsman stayed there for an hour or two before taking a taxi home, Ms. Livingston said.

It is unclear why Mr. Huntsman passed on a different account or why his daughters did not seek earlier to correct it. Ms. Livingston declined to address those questions.

The article in The Journal said the reporter had heard the story from “several people familiar with it.” Ashley Huston, a spokeswoman for Dow Jones & Company, The Journal’s publisher, said in an e-mail: “The Wall Street Journal stands behind its story. We never discuss sourcing.”

Though everyone agrees on how the daughters were picked up for dinner, there are competing accounts among Mr. Bo and the daughters of some details later that night.

Ms. Livingston said Ms. Huntsman had told her that she left Nobu with Mr. Bo and his European friend and got into a red sports car, which Mr. Bo drove to a bar “at a very fast speed.”

“Mary Anne described it as a Ferrari, but she is not completely knowledgeable about cars and doesn’t want to mistake the actual car type,” Ms. Livingston wrote in an e-mail on Saturday. In an e-mail four days earlier, she said her sister had ridden in a car with Mr. Bo after dinner but “didn’t take notice of the car type.” Ms. Livingston declined to explain the contradictions in her statements.

In an interview, Mr. Bo’s European friend said Mr. Bo and his driver had picked him up for dinner in the black Audi, and then they had gone in that same car with Ms. Huntsman to the bar. He said, “In no way was there a red car.”

Exclusive: Bo's wife dressed as Chinese army general after Heywood death: source
By Chris Buckley

BEIJING | Tue May 1, 2012 8:18am EDT

BEIJING (Reuters) - A woman at the center of China's biggest political scandal in two decades, wife of deposed political leader Bo Xilai, had once dressed as a military commander last year in a bizarre episode that shines new light on the collapse of Bo's inner circle.

Bo, ambitious former leader of China's biggest municipality Chongqing, was sacked in March after police began investigating his wife, Gu Kailai, on suspicion of murdering a former family friend, British businessman Neil Heywood, in a row over money.

News of Bo's removal and the murder allegation against his wife, who is a lawyer and businesswoman, emerged only a month ago, but new details uncovered by Reuters show the house of Bo was already in chaotic decline at the time of Heywood's death.

The new details, provided by sources with knowledge of the police case against Gu, include that she is alleged to have poisoned Heywood after the Briton demanded a 10 percent cut for his role in organizing a large, illicit money transfer for her.

A few days after Heywood was killed in Chongqing, southwest China in November, Gu strode into a meeting of police officials wearing a military uniform and gave a rambling speech in which she told the startled officials that she was on a mission to protect the city's police chief, Wang Lijun, the source said.

"First she said that she was under secret orders from the Ministry of Public Security to effectively protect Comrade Wang Lijun's personal safety in Chongqing," said the source, adding that she wore a green People's Liberation Army (PLA) uniform with a major-general's insignia and bristling with decorations.

"It was a mess," he said of Gu's speech, which circulated among some police and officials. "I reached the conclusion that she would be trouble."

It was not clear to those present why Gu, who had never served in the military, had put on a PLA uniform or what she was trying to convey with her vow to protect Wang, the source said. The incident, on or about November 20, left the officials even more bewildered about her mental state, he added.

At that time, Heywood's family had been told that there were no suspicious circumstances and that he had died of a heart attack brought on by excessive alcohol consumption.

Only later did Wang begin probing Heywood's death, treating it as a poisoning and identifying Gu as chief suspect. He revealed his suspicions to Bo at an explosive meeting in January, sources said. The police chief then fled to a U.S. consulate in February, hiding inside for more than 24 hours before leaving into the custody of central government officials.

Wang had been the spearhead of Bo's anti-corruption drive in Chongqing, a plank in the politician's barely concealed campaign to enter the topmost ranks of the ruling Communist Party.

HEYWOOD 'DEMANDED 10 PCT'

Gu's appearance in PLA uniform was part of a cascade of extraordinary events that have led to China's worst leadership crisis since the 1989 Tiananmen Square crackdown, months before the party anoints a new generation of top leaders.

There had been rumors circulating in elite circles that Gu had been assigned a military rank, but officials dismissed them as an attempt to brandish her authority and background.

Her uniform was of the same rank as her father's, a PLA leader who fought the Japanese occupation in the 1930s and 1940s, and might have been given to her out of "respect for her father", said a second source with knowledge of the incident.

Even if Gu was somehow entitled to the uniform, which the sources doubted, the civilian setting in which she showed her apparent military rank made her performance disturbing and politically troublesome, they said.

"That was clearly a violation of disciplinary rules, a serious one," said the first source with ties to Bo and his family, referring to talk among officials that Gu had assumed a military title. "Even her background gives her no right to do anything like that."

Gu and the family's 32-year-old aide, Zhang Xiaojun, have been named as the main suspects in the murder of Heywood, whose body was found in a Chongqing hotel room on November 15. Chinese authorities say he was poisoned.

Bo, who was suspended from the elite Politburo last month, could later face a police investigation as well.

Neither Bo nor Gu has been allowed to answer the accusations in public. Heywood's family has also declined to comment.

Chinese government ministries have not responded to written questions about the case against Gu.

A source citing details from Wang's testimony to investigators said Gu became angry and increasingly distrustful with Heywood after he demanded "at least 10 percent" to move a large sum abroad for her.

Sources had previously said Heywood demanded an unspecified proportion of the deal that Gu considered too large.

"It was a large amount, probably from a dirty deal, and Heywood was also nervous about handling it," said the source. He said he did not know the size of the offshore transaction.

It remains unclear how Heywood might have helped Gu shift money offshore. Chinese citizens are only allowed to transfer $50,000 out of the country each year.

BO'S MISGIVINGS

Long before Gu's alleged falling out with Heywood, Bo voiced misgivings about her involvement in business, according to another British businessman who had dealt with Gu and Heywood.

"He hated what she was doing," said Giles Hall who dined with Heywood and the Bo family on a visit to China a decade ago, recalling a heated conversation overheard between Bo and Gu.

"There was an agitated conversation going on. There were a few threats being made. We were a bit nervous. We were in this restaurant. We said (to the interpreter) 'What's the problem?' and the interpreter said 'Her husband does not like her business dealings'. So he wasn't happy with it."

Hall, who was trying to tempt Bo to set up a tourism venture involving a hotair balloon, said Gu showed a ruthless streak.

"You couldn't cut her up (cross her) that was for certain. She said to me 'You cross me - never come to China, you'll never get out of jail'. There was no mucking about."

(Additional reporting by William Maclean in LONDON; Editing by Bill Tarrant and Mark Bendeich)

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